That sowing sound you hear is casino executives from Las Vegas to Hong Kong heaving a gargantuan sigh of relief that all the incumbent gaming concessions in Macao were renewed last weekend, leaving Genting Group still on the outside looking in. Some Wall Street analysts made fools of themselves by rushing out on a limb and predicting Genting would make the cut. Considering that it had no presence on the ground in Macao, Genting’s bid was pretty rash and we’re not at all surprised that Chinese authorities ultimately backhanded it. But it was useful for putting a scare into the senior concessionaires and getting them to pony up billions upon billions of dollars for non-gambling attractions that are probably not going to be very remunerative, barring a drastic transformation in the makeup of the Macao-bound traveler. (Maybe that Hello Kitty theme park mooted by SJM Holdings will be making a comeback.) As The Associated Press put it, “the requirement to spend on theme parks, music and sports adds to financial pressure at a time when revenue has plunged under anti-virus restrictions.”
Global Gaming Business seconded that observation, noting that China is stubbornly sticking to its preposterous “zero Covid” policy, one that has kneecapped the Macanese economy. Nor will casinos, as they eventually rebound, be able to play by the same rules as before, particularly as regards VIP junkets: “The can be no proxy betting or under-the-table betting arrangements with players that seems to have occurred in the last 20 years.” While taxes on gambling revenue not derived from Chinese players have been lowered, international tourism to Macao is such a drop in the bucket that the policy leniency is an empty gesture. Waving aside reality, “We believe the repercussions of Covid-19 will only be temporary and the normal travel arrangements will be restored after the pandemic so that the concessionaires can carry out different plans and projects in accordance with their pledges,” a Macanese cabinet airily proclaimed. Nevertheless, at least four of the six winners were quick to suck up to City Hall for being clement in the re-bidding process.
Not surprisingly, stocks of the affected companies rebounded. As Credit Suisse analyst Ben Chaiken put it, “The announcement this weekend should remove the ‘zero Macau value’ downside case.” One analyst who has been particularly skeptical of the Macao outlook, J.P. Morgan‘s Joseph Greff, changed his tune, writing that “We like Macau for 2023.” He added, “As we head into 2023, we think Macau has the most upside within our coverage universe.” No shit, as it’s basically been written off.
“While we are far from being experts on China policy,” Greff allowed, “we think China’s actions may ultimately be different than its words given several steps recently to gradually improve travel mobility, which has been the biggest impediment for an inflection in Macau’s fundamentals. We subscribe to the idea of following what China does (i.e., recent steps to loosen restrictions) versus what China says (adherence to zero-COVID policy in various public commentary). We know that in various and small samples sizes that when Macau is accessible, demand is strong (the problem is that this has been few and far between).” He predicted Macao would achieve 60% of pre-pandemic gambling revenue next year and 90% in 2024, concluding, “We’d like to think these numbers are rooted in conservatism.”
In other Wall Street news, Greff fired off warning shots regarding DraftKings and Penn Entertainment, saying, “We suggest investor rotate out of DraftKings and Penn Entertainment, which we are downgrading today.” Uh-oh. With regard to DKNG, “we see a longer runway and more risk to achieving OSB profitability than its peers and with the stock’s bounce since earnings, we see 20% downside to our year-end 2023 price target.” As for Penn, “shares are within reach of our price target and we see it as possessing less upside than either LV Strip-centric and LV Locals centric stocks; so we see it as a relative underperformer.” Penn got some additional bad news from the New York Times, which ran an exposé of Barstool Sports founder Dave Portnoy. The latter screeched that the Gray Lady had made him out to be a “scumbag.” That wouldn’t be difficult, seeing as Portnoy is a scumbag and the prosecuting attorney is his own big, foul mouth.
For instance, Portnoy said listeners should bet the “house, kids, family” on one game that was supposedly a lock. Like Harvey Weinstein when caught with his zipper down, Portnoy fell back on the defense that the NYT hadn’t given him enough of a platform for a response. “More than a week before the article published, we presented Mr. Portnoy with an opportunity to answer detailed questions related to our reporting, which was thorough and fact-based,” riposted the Times. “Despite our offer, he declined to provide any answers, and has yet to challenge any facts in our reporting.” Sounds like Portnoy, all right, a man so toxic that New York State wouldn’t allow Barstool an OSB license. Even more telling was Portnoy’s father confessor of choice: sexist pig Tucker Carlson. While the Times‘ overall package on sports betting smacked of an agenda, Portnoy is a veritable piñata of bad press for Penn and will make getting OSB licenses for the parent company very difficult. Unfortunately, Penn CEO Jay Snowden has been snowed by Portnoy’s frat-boy culture and is highly unlikely to cut it loose.
Station Casinos is touting a “new look” for the Wildfire-branded mini-casino that is going up on the old Castaways site (above). From the outside, it looks an awful lot like the Ed Vance design that Station was shopping 15 years ago. (Alas, we no longer have the rendering.) But hey, it was a good concept and if Station stuck with it, so much the better for them. What’s more important is that after rashly buying the site almost 20 years ago to keep it off the market (and then trying without avail to unload it), Station learned patience and waited for the economic complexion of the surrounding area to change for the better. Station was eventually successful in selling off chunks of former Castaways land and now finds itself surrounded by “a 344-unit apartment complex, a mini-storage facility and a building that the Southern Nevada Health District plans to occupy.” Good going. The Fremont Street Wildfire won’t make a big dent in the unemployment problem (45 jobs) but it’s a heartening sign for that Downtown stretch, once pretty darn forlorn.
Although the Las Vegas Raiders are no longer a laughingstock, here comes the Las Vegas Invitational to replace them in the penalty box. Or as Sports Illustrated‘s Dan Gartland put it, “What happens in Vegas shouldn’t happen again.” Over the weekend, 10 women’s basketball teams held a tourney at The Mirage. Wait, you say, The Mirage has no events center. That’s right. Against a removable ballroom wall, “the tournament organizers set up court … and the teams played in the middle of the beige expanse with virtually no spectators.” And when a player was injured, it took 45 minutes for medical help to reach the (pathetic) scene. Throw in no scoreboard, no towels for players (who had to borrow hotel ones) and no bleachers and you have a PR black eye for women’s roundball but an even bigger one for organizer [sic] MGM Resorts International. The Mirage cannot pass over to Hard Rock International soon enough.
Too late? “We have notified The Mirage that we won’t be coming back again. This is a one-time disaster in terms of events,” fumed site coordinator Ryan Polk. “It definitely did not go the way we thought or planned.” Even head coach Teri Moren of tourney winner Indiana University felt the need to vent: “there are probably other people that need to apologize as well for wanting us to come and play in this event … we’d taken a couple of steps backward in this moment.” To add insult to literal injury, the Las Vegas Holiday Classic for mens’ b-ball was being held across town at an appropriate venue, The Orleans‘ arena. Sin City needs to do a lot better by the ladies next time … if there is a next time.
Mirage had its shortcomings but the blame should be put on the site coordinator. He should have inspected the site and known the problems that it would create. The organizers picked a bad site and now want to point fingers away from themselves. Shame on them.